By Darcie-Nicole Wicknick
Special to MusicBizAdvice.com
HOW A SONGWRITER MAKES MONEY FROM A SONG
A common misconception about recording artists is that they’re the ones who make the money (after the labels). I have to break it to you: that’s not the case. The real money comes from being a songwriter.
WHAT IS A PERFORMANCE RIGHTS SOCIETY? (ASCAP, BMI, SESAC)
The first thing you need to know about sources of songwriting income is the role of the performance rights society. The performance rights society is a “watchdog” that ensures that when your song is aired or performed live, you’re paid–be it the Writer’s Share or Publisher’s Share or both (depending on how you’re registered with the performance rights society). Performance rights societies work with you to ensure that you are compensated correctly. The three major performance rights societies in the United States are ASCAP (American Society of Composers, Authors and Performers) BMI (Broadcast Music Incorporated) and SESAC (The organization originally called Society of European Stage Authors and Composers). (For additional information, see Links and Resources.) Part 2 of this article will discuss the advantages of each performance rights society to help you choose the one that’s right for you.
PUBLISHING DEALS: DO I NEED A PUBLISHER YET?
Think of a song being worth 200% rather than 100%. Today we’ll focus on the 100% divisible between Writer and Publishing Company (Publisher).
Early on in your career, you do not need to sign up with a Publishing Company; in many cases, getting a publishing deal with a company is as difficult as getting a recording contract, and is often as involved. But if your music is recorded by a national-level artist or if you want to place your songs regularly in film or television, these are the three types of deals that writers can make with publishing companies to help make their music more profitable. (As with any contract, the terms of your agreement are customized and depend on your leverage in the industry, or that of your lawyer and/or manager.)
FULL PUBLISHING DEAL
In a Full Publishing Deal, the Publisher owns your copyright for a negotiated Term (length of time) and owns half of the royalties from licenses and revenue. This contract will most likely state that the Writer is exclusive, and anything that the writer creates during the term, within the scope of the art that the Publishing company solicits “work” for, the Publisher must be granted first refusal. The Publisher actively (we hope) pursues placement of the song (called “licenses”) and will negotiate and execute the appropriate contracts in each case.
In a Co-Publishing Deal, the Publisher is entitled to some of the copyright for the negotiated Term, usually fifty percent. The Publisher is also entitled to a negotiated percentage of royalties called the Publisher’s Share. As above, usually the Publisher actively pursues placement of the song and negotiates and executes all the contracts.
In an Administration Deal, the Writer simply hires the Publisher to help out with copyright filing and to administer the contracts. In this scenario, the Writer is usually the solicitor for placement, but the Publisher is the administrator to facilitate the contracts. In this arrangement the Publisher does will not own the copyright at all and cannot make decisions regarding the song’s use, but will be entitled to 10-25% of the revenue from licenses as compensation for the administration of the contracts.
Many Writers who are writing for themselves or for only a select number of artists establish their own Publishing company and hire people to work the songs. This adds to their song revenue. In any case, a Publisher must have a performance rights affiliation, and Writers are highly encouraged to do so.
IMPORTANT NOTE FOR U.S. SONGWRITERS WITH PUBLICITY DEALS WHOSE MUSIC IS DISTRIBUTED INTERNATIONALLY
If you have a deal with a publisher and your music is distributed internationally, be sure that your royalties are calculated at source, meaning in the U.S. from the source of the distribution. Otherwise you will be losing cuts of fees paid to sub-publishers in other countries–which can really add up. Be sure to read the fine print, and ask your attorney to negotiate you out of paying additional royalty shares to sub-publishers.
ROYALTY SOURCES FOR THE SONGWRITER AND PUBLISHER
There are many sources from which writers can collect royalties. Here are a few of them:
COMPULSORY MECHANICAL LICENSES & THE ROLE OF THE HARRY FOX AGENCY
A compulsory mechanical license is sought when an artist wants to cover a song (or portion thereof) that another artist has already recorded. (This license differs from a license someone would seek to record a sample of another recording on their new sound recording; That is a non-compulsory master use license, which we’ll cover in a moment.) The owner(s) of the song must grant this license, as long as the artist is replaying the song or part thereof in a completely new performance of it. The artist who seeks this license (obtainable through http://www.harryfox.com) pays a flat rate per song, per unit pressed (not sold), in advance, up to five minutes in length, and no more than ten songs per album. (The flat rate varies, so contact Harry Fox Agency for today’s rate.)
The Harry Fox Agency will then distribute the royalties to the appropriate parties that own the song (this may be the writer, the publisher, and/or other entities, depending on the individual circumstances).
If you don’t know who owns a song, you may look that information up on ASCAP and BMI websites in their respective TITLE SEARCH sections.
FILM SCORES, TELEVISION, AND TELEVISION COMMERCIALS
Oftentimes a movie soundtrack or television show will want to use your song to enhance its visual. Or, an advertiser will want to endorse a product with your song. These licenses are not compulsory. Several licenses must be obtained and you the writer benefit from some of them.
They will need to obtain a master use license (from the label, most likely), and you will not benefit from this license because this license comes from the owner of the sound recording. They will also need to obtain a synchronization license – a license to put the song into film, synching it with video. The writer does benefit from this, and you are paid every time this film or clip airs.
If the song will also be used on the recording for sale of the movie or TV soundtrack, the film company and/or record company for the soundtrack needs to obtain another master use license for that purpose, plus a mechanical license (not a compulsory mechanical license.) This is why sometimes you will hear a song in a movie but it doesn’t make it to the CD; it’s very costly, and the label who owns the sound recording does not need to grant permission to reprint the song on a separate CD – especially if the soundtrack will be distributed by a label other than the original label.
The only license that must be granted by any label is the compulsory mechanical license, which allows an artist to pay to cover a song that’s already been recorded. The other licenses are the option of the owners of the song and/or sound recording. (That is why sampling is illegal without clearance.)
In the case of television commercials, the ad agency may decide to change the lyrics to fit the product. They may decide not to use the master, because the song is not a perfect fit lyrically or is too expensive to obtain. So they will obtain a special synchronization license in this case, revise the lyrics to fit the ad, and the new lyricist will be a partial owner for the revised lyrics.
Digital licenses apply to new media, and you need to file an application with the Harry Fox Agency before being granted licenses to distribute and/or display the music of others on a website in a digital medium. Visit the Harry Fox Agency’s website for assistance with this.
The printing of sheet music is a source of income for the writer(s) and publisher, around 4 cents per copy per song. Like compulsory mechanical licenses, the rates change very frequently. Please contact The Harry Fox Agency for more information on today’s rate.
BLANKET LICENSES FROM VENUE PERFORMANCES
It would be very difficult to track every time “Stormy Weather” or “Copacabana” got played on a jukebox or sung in a cabaret. For this reason, every performance venue (depending on size), and every place that owns a jukebox, pays blanket licenses to ASCAP, BMI, and SESAC that are shared among members as dividends. That way, you as a writer are ensured of getting compensated for performances of your song in live venues. Concert promoters regularly include ASCAP, BMI, or SESAC license fees in the costs of putting on concerts.
DIVIDENDS FROM SALES OF BLANK MEDIA
After years of litigation in the 1980’s, The RIAA (Recording Industry Association of America) deemed that writers are entitled to a share of blank media sold at retail because people dub tapes and CDs at home, thus creating loss of income for songwriters. They are also distributed as a dividend on a quarterly basis by your Performance Rights Society affiliate.
Radio stations, depending on size, are responsible to report every song’s airplay to the Performance Rights Societies ASCAP, BMI, and SESAC (if you reside in a country other than the US, check with a local attorney for the similar organizations in your country.) In the U.S., a system called BDS is used by labels and industry insiders to track airplay. Each time a song is played on the air, it generates income for the writer and the label (which owns the sound recording.) Because the Writer shares money with the Publisher, the publisher makes money, too.
HOW DOES AN ARTIST MAKE MONEY TO PAY BACK LARGE ADVANCES?
In a nutshell, artists make back their money (and hopefully make a living) in three ways:
- Via their menial share of the record sales (8-12% before the cost of free product and packaging).
- Big money from live appearances. Artists get paid for every magazine cover, every interview on Oprah and The Tonight Show, every TRL hosting, every concert performance, every time they sing at 5 a.m. on Good Morning America and then again at midnight on Saturday Night Live.
- Merchandise sales (posters, T-shirts, pins, clothes, etc.).
If the artist is lucky, he/she is only paying back the label from record sales (out of their 8-12%), which takes longer but at least they can afford to eat in the meantime. The producer gets 1-5% of the song as well, and the artist manager gets 15-25% of the artists’ gross income from all sources of the artist’s income resulting from the artist’s creative endeavors. If the artist tours, does TV appearances, movies, or is a spokesperson in commercials, the artist’s agent gets 10% of each appearance fee. That is why artists who don’t write their own material work so hard to promote themselves, and it’s why they depend so heavily on sales: to get out of debt!
Good luck, all you writers and artists out there! And remember, before you sign anything, please seek the guidance of an entertainment attorney when entering into a contract with any entity on matters pertaining to your career and licenses thereof. After your attorney has negotiated a good and fair agreement with you and a publisher, the publisher (in the right circumstances) may then execute license contracts for work garnered by your song.
Darcie-Nicole Wicknick is a freelance Music Business Consultant and a graduate of Berklee College of Music. Her firm, “…Ask Darcie” is located in Boston, Massachuesetts. For more information click on http://askdarcie.info
Special thanks to Attorneys Ed Blomquist, Maggie Lange, and Jay Fialkov, instructors of Entertainment Law and Publishing-related courses at Berklee College of Music in Boston.
LINKS AND RESOURCES FOR THIS ARTICLE
Darcie-Nicole Wicknick is a freelance music business consultant and the founder of AskDarcie Music Business Consulting. She is also Director of Boston Hip-Hop Alliance and lead vocalist for Velvet Stylus. She can be reached through her website at http://askdarcie.info.